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Back to the Future: International Trade Costs and the Two Globalizations

Listed author(s):
  • Michel Fouquin

    ()

  • Jules Hugot

    ()

This article provides an assessment of the nineteenth century trade globalization based on a systematic collection of bilateral trade statistics. Drawing on a new data set of more than 1.9 million bilateral trade observations for the 1827-2014 period, we show that international trade costs fell more rapidly than intra-national trade costs from the 1840s until the eve of World War I. This ?nding questions the role played by late nineteenth century improvements in transportation and liberal trade policies in sparking this First Globalization. We use a theory-grounded measure to assess bilateral relative trade costs. Those trade costs are then aggregated to obtain world indices as well as indices along various trade routes, which show that the fall of trade costs began in Europe before extending to the rest of the world. We further explore the geographical heterogeneity of trade cost dynamics by estimating a border e?ect and a distance e?ect. We ?nd a dramatic rise in the distance e?ect for both the nineteenth century and the post-World War II era. This result shows that both modern waves of globalization have been primarily fueled by a regionalization of world trade.

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File URL: http://cea.javeriana.edu.co/investigacion-publicaciones/documentos-trabajo/vniversitas-economica
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Paper provided by UNIVERSIDAD JAVERIANA - BOGOTÁ in its series VNIVERSITAS ECONÓMICA with number 015130.

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Length: 35
Date of creation: 15 Aug 2016
Handle: RePEc:col:000416:015130
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  1. Accominotti, Olivier & Flandreau, Marc, 2005. "Does Bilateralism Promote Trade? Nineteenth Century Liberalization Revisited," CEPR Discussion Papers 5423, C.E.P.R. Discussion Papers.
  2. Keith Head & Thierry Mayer, 2013. "What separates us? Sources of resistance to globalization," Canadian Journal of Economics, Canadian Economics Association, vol. 46(4), pages 1196-1231, November.
  3. Pascali, Luigi, 2014. "The Wind of Change: Maritime Technology, Trade and Economic Development," The Warwick Economics Research Paper Series (TWERPS) 1049, University of Warwick, Department of Economics.
  4. Pierre-Philippe Combes & Thierry Mayer & Jacques-François Thisse, 2008. "Economic Geography: The Integration of Regions and Nations," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00311000, HAL.
  5. Dobado-González, Rafael & García-Hiernaux, Alfredo & Guerrero, David E., 2012. "The Integration of Grain Markets in the Eighteenth Century: Early Rise of Globalization in the West," The Journal of Economic History, Cambridge University Press, vol. 72(03), pages 671-707, September.
  6. Michel Fouquin & Jules Hugot, 2016. "Two Centuries of Bilateral Trade and Gravity data: 1827-2014," VNIVERSITAS ECONÓMICA 015129, UNIVERSIDAD JAVERIANA - BOGOTÁ.
  7. Sharp, Paul & Weisdorf, Jacob, 2013. "Globalization revisited: Market integration and the wheat trade between North America and Britain from the eighteenth century," Explorations in Economic History, Elsevier, vol. 50(1), pages 88-98.
  8. Treb Allen & Costas Arkolakis & Yuta Takahashi, 2014. "Universal Gravity," NBER Working Papers 20787, National Bureau of Economic Research, Inc.
  9. Shang-Jin Wei, 1996. "Intra-National versus International Trade: How Stubborn are Nations in Global Integration?," NBER Working Papers 5531, National Bureau of Economic Research, Inc.
  10. Helpman, Elhanan, 1987. "Imperfect competition and international trade: Evidence from fourteen industrial countries," Journal of the Japanese and International Economies, Elsevier, vol. 1(1), pages 62-81, March.
  11. Lampe, Markus, 2009. "Effects of Bilateralism and the MFN Clause on International Trade: Evidence for the Cobden-Chevalier Network, 1860-1875," The Journal of Economic History, Cambridge University Press, vol. 69(04), pages 1012-1040, December.
  12. Nye, John Vincent, 1991. "The Myth of Free-Trade Britain and Fortress France: Tariffs and Trade in the Nineteenth Century," The Journal of Economic History, Cambridge University Press, vol. 51(01), pages 23-46, March.
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